Netflix CEO, Reed Hastings, Discusses the Future of Media

Reed Hastings in a letter to Netflix and its investors:

Over the coming decades and across the world, Internet TV will replace linear TV.
Apps will replace channels, remote controls will disappear, and screens will proliferate.
As Internet TV grows from millions to billions, Netflix, HBO, and ESPN are leading the way.

For those of you who wrote Mr. Hastings off in the summer of 2011, I suggest you read this and re-evaluate your perspectives.

At the helm of a startup that's reshaped the way we consider modern media consumption, Hastings has repeatedly shown a well-tempered philosophy with regard to the future of the landscape.

Of course there've been sizable problems once or twice, but, at the end of the day, he's a fallible man. And in this 11-page document, we bear witness to a very thoughtful gentleman opining about the future of his industry.

Of particular note is Hastings' clear alignment with — and belief in — Netflix's future of platform agnosticism as a key to its growth. He cites the increasing proliferation of intelligent television devices as a primary reason for such thinking — a notion that makes a very large amount of sense, contrary to the genuine lack of such forethought in the industry.

Hastings is also fundamentally aware that Netflix's position of dominance and growth can only be sustained for so long. He writes of the impending large-scale disruption of television and explains his plot for Netflix to help nurture, encourage, and support such growth — even by offering supportive olive branches to pre-existing and well-entrenched cable companies.

It's a candid, thoughtful, and well-considered look into the near future and is an immediate source of excitement for me as a fan of innovation and media. (And Netflix, obviously.)

Along with Jeff Bezos, I find Reed Hastings to be one of the most affable and impressive executives around. Moreover, I'm hopeful the combination of performance with outward messages of optimism such as this will help solidify confidence and excitement in both Netflix and Hastings.

Most of all, though, we've found the holy grail of the media industry: a likable, forward-thinking executive with a vested and well-stated interest in nurturing the disruption of his industry.

The 11-page letter is available, in its entirety, on Scribd. Peter Kafka has also provided some interesting insight into the document at AllThingsD.

"Let Jason Kilar Take a Bow"

Peter Kafka, AllThingsD:

In the meantime, we can take a minute and give Kilar credit for building and maintaining an influential, important and valuable site many people pronounced dead as soon as it was born.
As Kilar himself notes, Hulu’s unofficial launch name was ClownCo, because any sensible person knew that there was no way Big Media companies could form a worthwhile joint venture, and zero chance they’d be able to create a decent video site. That’s the kind of thing that you left to the smart tech guys at places like Myspace, Veoh and Metacafe.
Surprise! Those guys are gone, and Kilar and his team ended up building a really great website, and then kept it up and running for 5 years, while generating real money by the end of his run. Meanwhile, the site’s value doubled, to $2 billion.

Sometime in 2008, after a particularly heavy weekend, I remember one of my housemates emerging from his darkened bedroom — eyes bloodshot and exhausted — with a confusing smile on his face.

"I just watched the first season of 'Arrested Development' non-stop for most of the day," he proudly remarked.

Noting that I was fairly unperturbed by his achievement, he added one simple — and, then, somewhat revolutionary — word to the end of his statement: "Legally."

As a student, Hulu was an unfathomable gift. Having watched as friends repeatedly received DMCA notices for pirating television seasons, Hulu suddenly appeared with the endorsement of the industry whose content it sought to share freely with the world.

Perhaps the service has fallen somewhat slack in light of the rise of Netflix, but, nevertheless, it remains one of the most memorable services I've ever had the pleasure of using.

And, as Kafka highlights, it was, indeed, a pleasure to use. Greeted by a fairly well-designed site and that smooth narratorial voice at the beginning of each episode, Hulu stood well apart from the pack and unquestionably paved the way for digital streaming into the lives of countless people in the United States. And, against the odds, Hulu still looks and behaves wonderfully well today.

Kilar was, without a doubt, given an extremely raw deal by Hulu's stakeholders. He was tasked with developing, launching, and sustaining a product that was otherwise destined for catastrophic failure. And, with this hand, Kilar did not resign himself to the obvious, but instead rose to the occasion and built an industry disrupting service.

Regardless of Hulu's issues — all of which are largely borne out of stakeholder issues — Kilar deserves plenty of praise for what he achieved with the service. Although I rarely use Hulu any more, I certainly feel indebted to Mr. Kilar and his team for all that they've achieved over the past six years.

More than that, I'm excited to see what such a talented and forward-thinking businessman might get up to next.

One Billion More Movies Streamed Than Physically Purchased In 2012


William Launder for The Wall Street Journal:

Paid, legal movie downloads in the U.S. are expected to reach 3.4 billion views this year, more than doubling from 1.4 billion last year. Physical video viewing will shrink to 2.4 billion views from 2.6 billion views last year. The trend is expected to continue in the years ahead, according to IHS.

[…] Online viewing is expected to generate $1.7 billion for 2012, compared to $11.1 billion created from viewing on physical formats. By 2016, online viewing will still only account for 17% of associated industry revenue, while physical videos will generate 75% and video-on-demand pay television will account for the remaining 8%; according to IHS.

Consumers will pay an average of 51 cents for every movie watched online in 2012, compared to $4.72 for a physical video.

Amid lingering uncertainty over Netflix’s long-term viability, all statistics and trends point to a thoroughly favorable outlook for the streaming giant.

Original content, renewed marketing efforts, an extensive library, and near-ubiquitious availability each betray a service that is undoubtedly set to guide our media consumption habits for the coming years. Despite Netflix’s relatively low stock price compared to this time last year, I cannot help but feel wholeheartedly optimistic for the company’s future.

The future clearly lies in digital distribution and, with the increased availability of 1080p content, the landscape is becoming increasingly compelling to behold.

As I’ve said many times before, competition is a very good thing, indeed.